MONEYMORNING: What’s happened here actually is very simple. Thanks to better medicine, better diets and simple science, people are living longer and the companies that are responsible for pension plans and insurance payouts didn’t plan for this. So they’ve got hefty future payments to make up.
Every year of additional life expectancy typically adds as much as 4% to future pension requirements, according to Dutch insurer Aegon NV (NYSE ADR: AEG). Aegon said last week that money set aside to cover policyholders in the Netherlands, who are living longer than expected, resulted in a 12% hit to its first-quarter profits.
Enter death derivatives…. (more)
